STOCKS | Australian Stocks Edge Higher Amid Investor Buying, Despite Middle East Conflict Concerns

Australian stocks saw a slight increase on Tuesday as investors bought at lower levels, according to Jin10. However, concerns over inflation risks from the expanding Middle East conflict, weak demand, and rising borrowing costs led to the largest monthly decline since June 2022. The S&P/ASX200 index fell 7.8% in March, with energy stocks being the only major sub-index to rise, driven by higher oil prices, marking an 18.5% increase and the best performance since April 2020. Swap contracts indicate a 58% probability of a rate hike by the Reserve Bank of Australia in May, with an implied 60 basis points of rate hikes remaining for 2026. Luke Winchester, a portfolio manager at Merewether Capital, noted that the market is currently betting on a quick resolution to the Middle East conflict. He agrees with experts who believe the situation could worsen if it is not resolved swiftly, suggesting that rate hikes would only exacerbate the pain in such a scenario.